How has the Real estate Sector performed in Q1, 2023?

The real estate sector in Dubai is recognized worldwide for its state-of-art, luxurious, stunning, and extravagant properties. These attributes attract investors from across the globe to invest in Dubai’s real estate and reap the benefits of its ultra-luxurious properties and enjoy the highest return on Investment (ROI) of 7-8% – the highest in the world, and Q1, 2023 was nothing different. The city’s property market has set a new high and is constantly evolving with new one-of-its-kind developments.

Distinctive quality and design, high return on investment (ROI), and favourable government policies and initiatives supporting the real estate sector like – Dubai Economic Agenda (D33), Masterplan 2040, and District 2020 have been the key drivers behind this exceptional performance. The property market is also gaining from the after-effects of Expo 2020, which has led to a huge proliferation in the demand for real estate in Dubai.

Real estate transaction in Q1, 2023

According to DXB Interact, in Q1, 2023, a total of 30,898 sales transactions worth AED 88.7 billion (US $24.15 bn) were recorded. There was a 60.46% YOY increase in the property sales value in Q1, 2023.

Out of 30,898 sales transactions – 22,922 apartments were worth AED 45 billion, 5,682 villas worth AED 22.1 billion, 889 commercials worth AED 1.6 billion, and 1,405 plots worth AED 19.9 billion.

Compared to Q1, 2022, there was a 72.1% increase in the number of apartments sold and a 0.2% surge in the number of villas. Sales of plots increased by 77.4% while sales of commercial property witnessed an increase of 19.8%.

Substantial Increase in Off-plan Property Sales Transactions

According to DXB Interact, 13,548 apartments were sold in Q1, 2023 worth AED 29.4 billion. This was a 94.8% increase in the sales of apartments compared to Q1, 2022. Sales of villas in Q1, 2023 were 4,076 worth AED 13.7 billion. This was a 6.3% increase compared to Q1, 2022. 70 Commercial properties were sold worth AED 312.2 million in Q1, 2023. This was a 15.7% decline compared to Q1 2022.

Surge in Ready Property Sale Transactions

According to DXB Interact, 9,374 apartments were sold in Q1, 2023 worth AED 15.7 billion. This was a 47.3% increase in the sales of apartments compared to Q1, 2022. Sales of villas in Q1, 2023 were 1606 worth AED 8.5 billion – a 12.5% decrease compared to Q1, 2022. 819 Commercial properties were sold worth AED 1.3 billion in Q1, 2023. This was a 24.3% increase compared to Q1 2022. The sales of plots in Q1, 2023 increased by 77.4% compared to Q1, 2022 to reach 1,405 worth AED 19.9 billion. 

Off-plan vs. Ready Property Sales 

Going by Sales volume, 60% of the transactions that took place in Q1, 2023 were for ready properties, while 40% were for off-plan properties. 

In terms of Sales value, 63% of the transactions were off-plan, while 37% are for ready properties.

Rise in Mortgage Transaction

A total number of 8,889 Mortgage transactions worth AED 31.4 billion happened in the first quarter of 2023. This was a 62.9% increase in terms of the number of transactions compared to Q1-2022 and a 24.6% increase in total value when compared to the first quarter of 2022.

Property Prices Witnessed an Upward Trend

Property prices also witnessed a rise in the first quarter of 2023. According to DXB Interact, the median price for the property increased from AED 1,131 per sq. ft. in 2022 to AED 1,285 in Q1, 2023. This was a 13.6% year-on-year (YoY) increase in property prices. When compared to Q1, 2014, the property prices in Q1, 2023 increased by 31.5%.

The price per sq. ft. for an Off-plan apartment in Q1, 2023 stood at AED 1,776 while the prices for an Off-plan villa were AED 1,172 per sq. ft. For the Plot, the price per sq. ft. was AED 700

The price per sq. ft. for the Ready apartment was AED 1,148 while the price per sq. ft. for the Ready villa was AED 911.

Surge in Demand for Luxury Properties

For a long time, Dubai has been witnessing a continuous rise in the demand for luxury properties and Q1, 2023 was no different. 65% of the total properties sold in the first quarter of 2023 were above AED 1 million.

  • 27% of the properties sold were in the price range of AED 1 million-2 million
  • 19% of the properties sold were in the price range of AED 2 million-3 million
  • 11% of the properties sold were in the price range of AED 3 million-5 million
  • 9% of the properties sold were above the price of AED 5 million

This sales value proportion does not include mortgage transactions.

Most Expensive Properties Sold in Q1, 2023

Villas – Palm Jumeirah remained the top choice of ultra-rich and HNWIs to buy premium villas. The most expensive villas sold in Q1, 2023 were at Palm Jumeirah worth AED 183 million, followed by Emirate living (AED 70 million, Dubai Hills (AED 47 million), Tilal Al Ghaf (AED 45 million), and MBR District 1 (AED 31 million).

Apartments – The top 5 projects with the most expensive sold apartments were Bulgari Lighthouse Dubai at Island 2 (AED 410 million), AIRE Dubai at Al Wasl (AED 119 million), One Canal at Dubai Water Canal (AED 73 million), ORLA by Omniyat at Palm Jumeirah (AED 65 million), and BV Residences 4 at Jumeirah Bay (AED 65 million).

Most Popular Areas

According to data from the DXB Interact, the top 5 areas in Dubai that witnessed the highest real estate transactions in Q1, 2023 were Jumeirah Village Circle (3310 transactions), Business Bay (2,750 transactions), Dubai Marina (2,287 transactions), Dubai Creek Harbour (1,758 transactions), and Damac Lagoons (1,351 transactions).

The most popular areas to buy villas were Damac Lagoons, Arabian Ranches Iii, The Valley, Villanova, Tilal Al Ghaf, Al Yelayiss 2, The Field, Emirate Living, Damac Hills 2, and Nad Al Shiba First.

The most popular areas to buy apartments were Jumeirah Village Circle, Business Bay, Dubai Marina, Dubai Creek Harbour, Burj Khalifa, Dubai Hills, Sobha Heartland, Town Square, Arjan, and Jumeirah Lakes Towers.

Outlook for 2023

Dubai’s property market is expected to lead the global price charts in Q2, 2023. This will attract ultra-rich and high-net-worth individuals (HNWIs) investors to the luxury property market.  

1.) Dubai will Lead the Prime Price Growth

According to the 2023 report by Savills, Singapore, and Dubai will lead the global price charts in 2023, both with projected prime price growth of between 6% to 7.9%. Both cities will continue to see sustained inflows of high-net-worth individuals. However, Dubai’s capital value growth, which will be similar to Singapore’s and will be around 12%. 

2.) Demand for Luxury Properties will outpace the Supply Resulting in Price Rise

The demand for luxury villas and apartments in Dubai has remained competitive and is expected to outpace the existing supply. This will lead to an increase in property prices in the coming months. Palm Jumeirah and the Dubai Residence complex have seen significant gains in the value of villas where prices have increased by up to 30% over the past year. This trend is expected to continue throughout 2023.

According to the latest report by Knight Frank, Dubai’s mainstream residential market is expected to register a price increase of 5-7% in 2023. The demand for luxury villas in Dubai will continue to grow as more foreign investors enter the market.

3.) Interest Rates will vary

The effects of higher interest rates on the real estate market in Dubai are expected to vary. Despite the uncertainty of a rising interest rate in the UAE, the real estate sector will continue to grow strongly. 

4.) Increase in Rents

The increase in property prices will result in a lack of affordable housing which will shoot up the rents and result in an overall increase in the cost of living in Dubai.